New Mexico, Other States Crush Jobs Through Licensing Requirements

Does New Mexico really need somebody to have two years of experience and take two exams before the person can repair a door?

Or two years of training to install a security alarm?

Or to train for two full years, pass two exams, and pay $318 before getting the state’s approval to operate paving equipment?

Tim Keller of the Institute for Justice doesn’t think so. He said a 2012 study reveals New Mexico has the 12th-most burdensome licensing laws in the country, and he said that holds back the state’s economy by putting hurdles in front of new businesses, unfairly targets low-income job applicants, and acts as a wall to protect companies that are already licensed from outside competition.

“These licenses essentially act as a government permission slip to work,” Keller said while speaking at a luncheon sponsored by the Rio Grande Foundation, a free-market think tank based in Albuquerque.

Keller is an attorney for the Institute for Justice, a civil liberties law firm based in Arlington, Va., whose lawyers were described as “a merry band of libertarian litigators” by columnist George Will.

Nearly One in Three Need Licenses

The institute cites a study from a University of Minnesota labor economist who said in the 1950s only one in 20 workers in the nation needed government permission to start a job. Today, it’s closer to one in three.

Last year, the Institute for Justice analyzed the license requirements in all 50 states and the District of Columbia and zeroed in on low- to moderate-income jobs like interior designers, massage therapists, and shampooers, not doctors and lawyers. The report showed that, on average, licensees had to pay $209 in fees, pass an exam, and complete nearly a year of training.

Louisiana and California had the most burdensome occupational licensee requirements in the country, with New Mexico finishing in the top quartile.

“There’s no doubt that there’s too much licensure, both across the nation and here in New Mexico,” Keller told New Mexico Watchdog. “The consequences are lost wages, lost jobs, and significant lost economic opportunities.”

More for Cosmetologists than EMTs

The study found whereas New Mexico requires emergency medical technicians to undergo 42 days of training, pass two exams, and pay $65 in fees to get licensed for their potentially lifesaving jobs, the state requires cosmetologists to undergo 373 days of training, pass three exams, and pay $180 in fees.

“Every single state requires individuals to obtain anywhere between 1,500 and 2,000 hours simply to cut hair [or] color hair inside of salons,” Keller said. “It costs individuals tens of thousands of dollars to attend schools before they can sit for the licensing exams, and there’s just no justification for this. The health and safety record inside of salons is actually quite good.”

The study also found that in the District of Columbia an individual must have six years’ experience, pay $925 in fees, and pass an exam to become an interior designer.

“That’s a lot of money for throw pillows,” Keller said.

In Tennessee, you have to go through 70 days of training, pass two exams, and pay $140 just to be a hair shampooer.

In Michigan, a worker has to pay $750 to get permission to become a “slot key person”—the guy or gal who handles complaints from slot machine players and verify jackpots.

Designers Need Six Years of Training

In Louisiana, interior designers must have six years of training. To install home entertainment systems, you have to pass two tests. To be an auctioneer, you must pay $475. You have to pay $225 to sell flowers and $125 to trim trees. And you have to pass two exams to be a terrazzo contractor.

Contractor requirements are the big reason New Mexico finished 12th-highest in licensing burdens. The state requires a two-year apprenticeship to become a general construction contractor. Only one-third of the states that license contractors require any experience to work as a commercial or general contractor.

Defenders of the licensing system say it’s necessary to protect the public health and prevent consumers from getting ripped off.

In Indiana earlier this year, a bill to reduce license requirements failed. In the Minnesota legislature, labor unions and trade associations rallied against a 2012 bill aimed at relaxing license requirements.

Arizonans Lose $600M Annually

Keller didn’t have numbers for New Mexico, but in his home state of Arizona excessive licensing requirements account for an annual estimated $600 million in lost income and wages to the state’s economy.

“The licenses are on the books because members of the regulated industries are knocking on the door of legislators … to fence out their future competition,” Keller said.

Some states have made changes. According to the institute’s study, when Mississippi replaced its cosmetology-license requirement for African hair braiders with what it called a “modest registration requirement,” 300 new braiders registered with the state.

Rob Nikolewski(rob@nmwatchdog.org)reports for New Mexico Watchdog. Used with permission of watchdog.org, where an earlier version of this article appeared.